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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) efforts to reduce the size and cost of its headquarters activities, focusing on DOD's: (1) efforts to reduce headquarters positions and associated costs in the Office of the Secretary of Defense (OSD) and Washington Headquarters Services, as required by the National Defense Authorization Act for Fiscal Year 1997; (2) efforts to reduce headquarters positions across DOD as required by the National Defense Authorization Act for Fiscal Year 1998; and (3) reporting of personnel on temporary assignment to OSD from other DOD components.

GAO noted that: (1) to comply with the requirement in the National Defense Authorization Act for Fiscal Year 1997, DOD plans to reduce OSD and its support activities by about 1,373 positions, or 27 percent, from its fiscal year (FY) 1994 levels by the end of FY 1999; (2) as of the end of FY 1998, DOD had cut 1,123 positions; (3) the majority of the cuts were based on DOD's November 1997 Defense Reform Initiatives report, which recommended that some offices be reorganized and that operational and program management functions be transferred to other DOD activities; (4) although the positions in OSD and its support activities have been reduced, civilian salary costs have not decreased because many of the positions eliminated were vacant and annual civilian pay raises have exceeded the inflation rate; (5) DOD plans to eliminate the remaining 250 positions in FY 1999; (6) DOD may not be accurately accounting for all personnel assigned to OSD; (7) some personnel temporarily assigned to OSD by other DOD components are functioning more as permanent staff and are not being reported as OSD personnel; (8) DOD has plans to cut about 5,600 positions across its headquarters activities by the end of FY 2002; (9) this is less than half of 13,300 cuts required by the National Defense Authorization Act for Fiscal Year 1998; (10) according to OSD officials, DOD did not develop plans consistent with the legislation because the Secretary of Defense had sought relief from the 1998 legislative requirement; and (11) however, when Congress did not repeal the provision, the services proposed that a task force be established to develop alternatives for reducing the headquarters' structure.

Recommendation for Executive Action

Status: Closed - Implemented

Comments: The office has developed a system for keeping track of detailees into OSD. The administrative instruction was revised in June 2000, to reflect that the Director of Administration and Management must approve all requests for detailees. In addition, all requests must identify the time period of the detail.

Recommendation: The Secretary of Defense should determine the number and purpose of all personnel temporarily assigned to OSD by other DOD components. Detailees that do not meet OSD's requirements of temporary staff should either be counted as OSD personnel or returned to their parent organizations.